Professional Builder Giant 400: What Happens Next?

It's been more than 13 years since the housing industry faced this kind of uncertainty. The economy still seems on fairly solid ground, but a lot of builders have sweaty palms and heart palpitations. They are the ones who remember1992. The worry is how many don't.

The big public builders should be ready for anything. Their balance sheets have never been stronger. But if the market really dives, leveraged land and spec inventory will be the wild cards nobody wants. That's why we put the chart with the Giants' spec building records on this page.

It now looks like a good bet that 2006 will not break any sales records. Can the big publics deal with that? "I don't think they have any idea how much pressure will be on their margins if the market goes into the deep freeze," says Credit Suisse stock analyst Ivy Zelman. "These guys won't decelerate land purchases the way Wall Street thinks — because they don't want to forego growth."

MASTER OF THE UNIVERSE CHALLENGES: "Responding to slowing demand and moderating prices, controlling construction costs to maintain margins in light of moderate price increases, reducing home building cycle time."

MASTER OF THE UNIVERSE OPPORTUNITIES: "Growth in Florida and Colorado..., continued growth in Texas with product line expansion (into) entry-level and semi-custom homes, entering new markets through acquisition or start-up."